Luxury Tax Summary:
Who is responsible for paying the Luxury tax:
Teams who are over the salary cap by more than $4,999,999.
What is the Penaltiy:
2 Points for every million over the salary cap once you have surpassed the threshold.
There will be no rounding at the current time.
Luxury Tax bill date: Bill will be handed out on Day 1 of the Playoffs.
Luxury tax payment deadline: All teams will need to pay the luxury tax bill before the first resigning period.
Tax Penalties for not paying Tax:
***This includes teams who can't afford it or teams who have not taken these points out of the bank. ***
-Teams who can not pay their bill will not be able to use either of their LLE or MLE until tax bill is paid off.
-Teams who can not pay their bill will ultimately be responsible for total balance.
Where does the luxury tax Points go:
-Luxury points will be distributed to the bottom 10 teams in terms of standing in a weighted format to be determined later
Purpose of Luxury Tax:
1. Tanking- Losing out on a good share of points would slow most teams from tanking.
2. Distribution of points- Sure these teams with great accomplishments deserve more points, but the teams that need them would get some much needed help with this system.
3. Contracts- Right now there is not one signle deterrant to stop a team from offering bird year guys max money even if they dont deserve it besides flexability.
4. Gives us a more realistic trade enviornment- Bad contract will have to be moved. In the real NBA you see teams scrambling to get rid of salary to get under the lux tax threshold. This would probably produce the same results and teams with cap space can take these said players on and also force the teams over the trade to send points as well via a trade.
5. Allows middle tier Free agents to hit the market to spread wealth of talented assets: With the Lux tax, you'll have to make a decision like the Hornets made this season, do i pay S Jax the max so no other team can snatch him up or do I let him hit the free market and find a replacement for cheaper. I'm not sure most teams would have made the same decision under the current ruleset that the commish did. But I'd hope this would push teams to make that exact same decision. S Jax eventually went to the rebuilding Pistons and is doing quite well there. Pistons got more talent and may be a better team in a couple of years, Hornets are still great. Win-win.
Please see below for the projected Lux Tax bill is for the current season:
Penalty Cap Room Team
28 ($14,335,773) Boston Celtics
26 ($13,485,760) Golden State Warriors
24 ($12,623,253) Philadelphia 76ers
24 ($12,595,595) Sacramento Kings
22 ($11,956,177) Minnesota Timberwolves
18 ($9,197,880) Seattle SuperSonics
16 ($8,181,700) Los Angeles Lakers
16 ($8,156,245) Houston Rockets
10 ($5,676,275) Memphis Grizzlies
10 ($5,106,627) Los Angeles Clippers
Each of the bottom 10 teams would average 19 points each .
Q: If I am at $-6,999,999 what is my bill?
A: 12 points.
Please ask questions below and i'll do my best to answer them.